The Faber Report

  Friday, 18 Oct 2019 | 9:40 AM ET

Activist shareholders put pressure on Marathon Petroleum

CNBC's David Faber reports on the latest on Marathon Petroleum and the pressure coming from activist shareholders such as Elliott Management and D.E. Shaw. He also weighs in on the back-and-forth between Emerson Electric and D.E. Shaw. »Read more
  Thursday, 17 Oct 2019 | 4:31 PM ET

Juul has lost more than a third of its value, sources say

Posted ByPippa Stevens

Embattled e-cigarette company Juul has lost more than a third of its value.

Sources told CNBC's David Faber that a decent-sized stake in the privately held company now trades for $90 a share, down from $300 in July when the company was valued at $38 billion.

Earlier this year tobacco giant Altria invested in Juul when the company was valued around $250 per share. But the company's valuation has continued to slide as regulatory headwinds mount.

On Thursday Juul announced that it plans to suspend the sale of its fruit flavors amid ongoing concerns over the health impact of e-cigarettes.

The Trump administration is expected to remove all flavored e-cigarette pods from the market, leaving only tobacco flavors.

"We continue to review our policies and practices in advance of FDA's flavor guidance and have not made any final decisions," Juul spokesman Austin Finan said in a statement. "We are refraining from lobbying the administration on its draft flavor guidance and will fully support and comply with the final policy when effective."

The Centers for Disease Control and Prevention said on Thursday that the number of fatalities from vaping-related illnesses has now grown to 33.

- CNBC's Angelica LaVito contributed reporting.

»Read more
  Tuesday, 15 Oct 2019 | 9:37 AM ET

DE Shaw gives searing indictment of waste at Emerson Electric, including fleet of 8 airplanes

Posted ByDavid Faber

D.E. Shaw, the $50 billion hedge fund that in recent years has engaged in shareholder activism along with its many other disciplines, released a voluminous report on Tuesday outlining all the ways it says Emerson Electric has failed shareholders over the last decade.

The report, obtained by CNBC ahead of its release, starts a campaign to bring significant change to the industrial giant, including asking it to split its industrial automation business from its climate technology business. D.E. Shaw also calls for a significant effort to cut costs.

The report, which also confirms that D.E. Shaw has a more than 1% position in Emerson Electric, is the funds first public utterance since the reports of its potential activism first surfaced.

Emerson's stock price, which has already responded to stories of D.E. Shaw's potential activism, was up slightly Tuesday.

The report offers a searing indictment of Emerson's long time chief executive officer David Farr and of its board of directors, who have presided over a significant shortfall in total shareholder return over the last three, five and 10 years when measured against Emerson's peers in the automation or HVAC industries not to mention a 10-year lag of 120% vs. the S&P 500.

D.E. Shaw focuses on what it says is a history of poor capital allocation by the company since Farr took over as CEO. Since 2000, Emerson has spent nearly $14 billion of capital when accounting for mergers and acquisitions and capital expenditures but has only increased its earnings by $400 million over that period when accounting for its capex. The resulting 3% pretax return on incremental capital severely lags almost every one of its peers, which post an average return of 11.4% during the same period. One culprit for those poor returns on capital, D.E. Shaw maintains, is a cost structure that includes the highest level of selling, general and administrative expenses relative to sales among its peers and the lowest revenue per employee versus those competitors and a broader universe of industrial companies.

»Read more
  Thursday, 10 Oct 2019 | 9:59 AM ET

Judge clears the way for Elliot, bondholder plan regarding PG&E bankruptcy

Posted ByDavid Faber
PG&E was down over 20% on Thursday following a court decision to open the door to competition in terms of plans to take the company out of bankruptcy. »Read more
  Thursday, 26 Sep 2019 | 11:10 AM ET

Watch the CEOs of Verizon, IBM and Qualcomm discuss the 5G rollout

Posted ByYun Li

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The CEOs of Qualcomm, Verizon and IBM gathered at the T2 Summit in Brooklyn on Thursday to discuss the rollout of 5G, a next-generation wireless network. CNBC's David Faber sits down exclusively with IBM's Ginni Rometty, Verizon's Hans Vestberg and Qualcomm's Steve Mollenkopf to talk about how 5G will change the future.

Vestberg previously told CNBC about half of the United States should expect to have functioning 5G wireless technology by 2020. Qualcomm announced earlier this month it has new chips that will make 5G phones more affordable next year.

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  Wednesday, 25 Sep 2019 | 10:11 AM ET

Activist wants Marathon Petroleum to split off Speedway gas stations and is gaining support

Posted ByYun Li

The call for Marathon Petroleum to split into separate businesses is gaining momentum among activist investors.

Billionaire Paul Singer's hedge fund Elliott Management sent a letter to the board of Marathon on Wednesday, urging the refiner to divide into separate retail, midstream and refining companies to "remedy the company's chronic underperformance." Elliott owns about 2.5% in Marathon.

Hedge fund D.E. Shaw, which owns a similar sized stake in Marathon as Elliott, is also supporting the breakup of Marathon, including spinning off Speedway gas stations, sources familiar with the matter told CNBC's David Faber.

Shares of Marathon jumped more than 8% on Thursday.

Elliott said the company can unlock more than $22 billion in value for shareholders with the split-up, which could give the stock a 61% boost.

Marathon later on Wednesday responded to Elliott's letter, saying it "engages in regular communication with its shareholders and welcomes constructive input related to enhancing shareholder value."

"We will thoroughly evaluate Elliott's proposal and look forward to continuing our constructive engagement around these issues," Marathon said.

Marathon has plunged more than 34% in the past 12 months, underperforming its peers including Phillips 66 which is down 13% during the same period.

»Read more
  Thursday, 19 Sep 2019 | 9:37 AM ET

AT&T is not focusing on a sale of DirecTV, sources say

Posted ByThomas Franck
AT&T and DirecTV
CNBC; Getty Images

AT&T is not considering a split with its DirecTV unit right now, people familiar with the situation tell CNBC's David Faber.

The company is focusing on a variety of other options to improve its business in the wake of a new activist campaign at the telecom giant.

A Wall Street Journal report Wednesday said AT&T was exploring a breakup with the unit. The Journal, citing people familiar with the situation, said the company has weighed several options for DirecTV, including breaking it off into its own company or combining it with Dish Network.

AT&T, which acquired DirecTV in 2015, is under pressure from noted activist investor Elliott Management and that firm's founder, Paul Singer, who've questioned its purchase of Time Warner and the management of CEO Randall Stephenson. Elliott's $3.2 billion stake in AT&T represents one of the activist's largest investments ever.

»Read more
  Tuesday, 17 Sep 2019 | 11:56 AM ET

Viacom CEO says new streaming services are boosting demand

Viacom CEO Bob Bakish says he's not worried about competition in the streaming space following his company's merger with CBS.

Bakish said streaming players like Netflix are a "growth segment" for Viacom as they supply the video streaming services directly through studio production.

"Every single one of the services that are either in the market today or are announced are doing business with us on an original production basis, so we are in clear demand," Bakish told CNBC's David Faber on "Squawk Alley" Tuesday.

The streaming sector is becoming a crowded space with Netflix holding large market share and other new streaming launches from Apple, Disney, HBO and Comcast on the horizon. But Bakish said he is not worried about the competition because ViacomCBS is a major supplier of content to the streaming companies like Netflix.

"We will, on closing, be the leading market leader in television audience share in the United States. That makes us a partner video distributors absolutely need to have as part of their offering," said Bakish.

"Still the majority of the consumers in the United States are big bundle consumers," he added.

Last month, Viacom and CBS announced the companies would merge into ViacomCBS. Bakish will be the CEO of the combined company.

Bakish said he expects the deal to close in December.

»Read more
  Tuesday, 17 Sep 2019 | 11:12 AM ET

Viacom CEO Bakish sees CBS deal closing in December, 'disappointed' by stock reaction

Posted ByKate Rooney

Bob Bakish, the head of a newly combined CBS and Viacom, said those companies' share prices aren't rallying the way he hoped.

"Clearly we're disappointed with how the stocks are reacting," Bakish told CNBC's David Faber on "Squawk Alley" Tuesday. Bakish said he spent the past two weeks talking to investors and "making sure they understand the tremendous opportunity ahead for CBS and Viacom."

Shares of CBS are down roughly 1% year to date, while Viacom is up just 0.4%.

After years of negotiating, CBS and Viacom announced an agreement to merge in August. The deal reunites the two companies after 13 years apart and several attempts at a deal since 2016. The new company will be called ViacomCBS and Bakish will lead the combined entity. Bakish told CNBC Tuesday that he expects the deal to close in December.

"We see substantial distribution revenues in this deal," Bakish said.

Joe Ianiello, who took over as CBS CEO last year, will be the chairman of CBS and will be in charge of those assets after the merger. Viacom spun off CBS in 2006.

The two media companies are controlled by Sumner Redstone's National Amusements. Redstone's daughter, Shari, is the vice chairman of the board at both CBS and Viacom and has advocated for bringing the companies back together to gain scale in a competitive media environment. Names like Disney, Comcast and AT&T have bulked up through a series of megadeals.

Bakish said players like Netflix are "also a growth segment" for Viacom as they supply the video streaming service directly with studio production.

"Every single one of the services that are in the market today are doing business with us on a traditional production basis — we are in clear demand," Bakish said. "As other people cut back from that, we think the free space is a substantial opportunity."

»Read more
  Tuesday, 17 Sep 2019 | 9:52 AM ET

SoftBank relationship was not a reason for WeWork IPO delay, sources say

Posted ByKate Rooney

Tension between real estate start-up WeWork and its largest shareholder, SoftBank, was not a central issue in the decision to delay an initial public offering, sources told CNBC's David Faber.

Sources told CNBC on Monday that the on-again, off-again IPO was delayed this week, adding another layer to the company's chaotic path to going public.

WeWork and the Japanese holding company, run by billionaire investor Masayoshi Son, had agreed to a $1 billion parallel private placement offer at the IPO price, the sources said. That would have enabled SoftBank's warrants to be repriced to the IPO price.

It also would have left at least $2 billion on the table for WeWork to raise in the public offering. Even at that price, they were unable to find a deep enough market at an amount WeWork was willing to accept, according to Faber's sources.

The Wall Street Journal reported that WeWork is expected to wait until mid-October "at the earliest" to start its investor roadshow. The Journal also reported that the delay could last longer, and some existing investors — including SoftBank — have asked the company to wait until next year to launch its IPO.

The delay comes after valuation targets for WeWork have dropped well below its private valuation, which was by some measures was as high as $47 billion. Sources told Faber last week that the IPO valuation could fall below $15 billion, perhaps around $10 billion to $12 billion.

The company is being met with skepticism about massive losses and its path to profitability as it looks to go public. WeWork has the second deepest losses in history the year before going public, according to Renaissance Capital. Uber, another SoftBank investment, saw the biggest losses ahead of an IPO. Investors had also questioned WeWork co-founder Adam Neumann's control over the company.

In response to those governance concerns, WeWork amended its S-1 filing to change its high-vote stock from 20 votes to share to 10 votes per share, which would curtail Neumann's voting power. Before that move, he controlled the majority of voting rights. The company also eliminated a key provision that would have allowed Neumann's wife, Rebekah, to lead the search for his successor in the event of his death or incapacitation.

The filing also states that WeWork will list its shares on the Nasdaq under the ticker WE. The question now hangs on whether or not an additional 30 days is enough to improve investors' outlook on what the company is worth. WeWork is set to update its S-1 filing, and according to Faber's sources, the numbers are "quite strong."

»Read more